Expect shortages and rising prices

A series of export gas projects planned for Queensland is likely to result in gas shortages in that state and in NSW.

A series of export gas projects planned for Queensland is likely to result in gas shortages in that state and in NSW.

This forecast, by the Australian Energy Market Operator, the body that manages the energy market, comes as gas prices are set to rocket thanks to the start of exports from the east coast.

The forecast of shortages also comes amid concerns over coal seam gas mining, which could ease shortfalls, in NSW and Victoria.

The export projects will consume up to 250 terrajoules of gas a day in Queensland and approximately 50 to 100 terajoules of gas redirected from NSW by 2019.

An AEMO report said the looming shortages in NSW could be addressed by upgrading pipelines, which could deliver more gas from Bass Strait to NSW, or by tapping gas locked in coal seams.

It also warned the likely exhaustion of the Otway Basin off Victoria's west coast in a little over a decade would add to the supply problems.

Coal seam gas from Gunnedah, in NSW's north-west, the Cooper Basin in South Australia and Queensland or the Surat Basin in Queensland could supply NSW in the future.

Queensland's gas exports will rise to around 1450 petajoules by 2020, which is more than 10 times existing annual gas demand in NSW.

The AEMO said domestic demand was projected to grow at 0.9 per cent a year from about 620 petajoules a year to about 750 petajoules a year by 2033.

This takes into account a likely fall in gas for power generation due to higher gas prices, lower electricity demand and likely lower carbon prices.

The AEMO report said NSW could experience shortfalls of 50 to 100 terajoules a day during the winter peak demand period from 2018.

The expected shortfalls in NSW could be addressed by new sources of supply from the Cooper Basin, piped from South Australia's Moomba, or by upgrading the Eastern Gas Pipeline from Victoria, establishing gas storage in Newcastle, and tapping gas in the Gloucester and Gunnedah basins, the report noted.

Upgrades to pipelines from Bass Strait have been proposed as controversy over tapping coal seam gas in NSW continues.

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